General Electric Co. (NYSE: GE) shares gained a bit of ground last week, closing on Friday up about 1% and a boost of 11 cents (0.6%) for the week. Nonetheless, GE’s hold on its place as the worst performing equity on the Dow Jones Industrial Average (DJIA) index remains solid with a year-to-date loss of more than 43%.
This is GE’s 22nd consecutive week as the Dow’s worst performer. The company maintains a big lead over the second worst stock, International Business Machines Corp. (NYSE: IBM), which is down about 8.1% for the year. and third-worst Exxon Mobil Corp. (NYSE: XOM), now down about 7%. Only five of the 30 Dow stocks have traded down so far this year.
The Dow posted an all-time high of 24,688.62 on Friday and closed the week at 24,651.74. As of Friday, the DJIA had increased about 24% for the year.
Following the prior week’s announcement that it will slash about 12,000 jobs in its Power segment, GE had a pretty quiet week on the news front. On Friday Lockheed Martin announced a partnership with privately held Aerion to build a supersonic business jet. GE’s Aviation segment teamed up with Aerion last May to develop the engine for the plane.
In a more interesting development, on Thursday Reuters reported that Argentina-based energy company YPF has sealed a deal to sell 25% of its electricity generation business (YPF EnergĂa ElĂ©ctrica) to GE and is also close to a deal to sell another 25% of the business to Blackstone. According to reports, YPF and GE have been in talks since July. YPF acquired the electricity generation business from Argentina’s Pluspetrol and spun it out as a separate business in 2013 at a value of $485 million.
YPF and GE in July secured $220 million in financing for two electricity generation projects in Argentina. Both included GE-made gas turbines. One is scheduled to begin operation this month and the other is tabbed to start up in February. Both plants have 10-year power purchase agreements (PPAs) with the state-run wholesale electricity distributor.
This is a tiny deal, but it indicates one way that GE might prop up its Power segment’s business: establish a partnership with a solid company to build generation plants; find financing; sell turbines to the partnership; acquire a stake in the project, alone or with a different partner; and collect payments on the PPA. The problem could be there just aren’t enough opportunities.
GE’s shares closed up 1% Friday, at $17.82 in a 52-week range of $17.46 to $32.38. The consensus 12-month price target on the stock is $21.99, down $0.15 from last week’s target. The low end of the price target range remained at $15 and the high end remained at $36.
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